The company announced the third-quarter report of 2017, during the reporting period, the company achieved revenue of 4.042 billion yuan, an increase of 99.37% over the same period last year, and realized a net profit of 238 million yuan, a year-on-year increase of 389.90%. The company's EPS was 0.1296 yuan per share, and the third-quarter results were in line with expectations.
The big increase in performance in this period is mainly due to the simultaneous increase in volume and price of cathode copper business.
As of 2016, the company's revenue is still mainly from the cathode copper production and marketing and trading business, contributing nearly 90% of revenue. During the reporting period, the sales volume and trade scale of self-produced cathode copper increased significantly compared with the previous year, while the copper price increased significantly during the reporting period, reaching about 55000 yuan / ton by the end of the third quarter, and the gross profit margin of the company's cathode copper business also increased accordingly.
To set up a new energy company and a wholly-owned grandson company, and continue to increase the overseas investment map in August 2017, in order to enhance the company's growth and expansion potential in overseas investment in the future, the company, together with related parties Pengxin Group and Pengxin Capital Management, jointly established Shanghai Pengpo New Energy Co., Ltd., with an investment of 50,000 yuan. In September 2017, the company's wholly-owned grandson invested 10 million US dollars to set up Pengxin Congo (Gold) Cobalt Ore Trading Center Co., Ltd. in the Democratic Republic of the Congo, on the one hand, to create a new profit growth point for the company; on the other hand, it will provide high quality and cheap cobalt ore raw materials for the company's cobalt hydroxide production line project.
Diversified industrial layout is under way, and the return on investment will begin to show in 18 years from 2016 to 2017. on the one hand, the company will continue to increase the cathode copper industry by raising an additional 1.7 billion yuan to invest in the construction of 20, 000 tons / a cathode copper production line and 7000 metal tons / a cobalt hydroxide project On the other hand, actively seek diversified development, subscribe for 16.17% of the shares issued by Clean TeQ in 2017 as long-term equity investment accounting, intervene in high-quality nickel and cobalt resources, and acquire 100% equity in Ningbo Tianhong, thereby indirectly controlling CAPM. Its core asset, OneGold, will form an annual production capacity of 1.98 million tons of ore and 95% gold. We roughly calculate that these projects will bring a total gross profit of 244 million yuan and 423 million yuan for the company in 2018 and 2019. If Clean TeQ's nickel-cobalt project is put into production in 2018, it will bring the company an investment income of 60.24 billion yuan in 2018 and 2019 respectively, and the company's future performance is expected.
Profit forecast and investment rating: we raised the company's 2017-2019 homing net profit to 353 million / 558 million / 731 million yuan, corresponding to EPS 0.19, 0.29, 0.39 yuan per share, corresponding to the current price, PE, 58, 0.37, 28x, respectively. If the fixed increase is successfully completed, the pro forma EPS is expected to be 0.17, 0.27, 0.35 yuan per share. Considering that the company's new production capacity will greatly increase the company's performance, while the original production capacity of Xitulu Copper Mine will remain stable in the next five years, the company's performance is expected in the context of high copper prices. We set a target price of 11.6 yuan, corresponding to 40 times PE in 2018, to maintain the overweight rating.
Risk hint: new production capacity is lower than expected, copper, gold and cobalt prices fall, and Clean TeQ performance is lower than expected.
